WHAT ARE THE 'DYNAMICS OF ECONOMIC WELL-BEING'?

September 13, 2006

Recently, the Census Bureau reported its findings on 2005 household income for the United States. Hidden in plain sight in the report are some data that help one understand what it takes to be middle class or above. And they show that staying out of, or getting out of, the lowest quintile is not rocket science, says David R. Henderson, a research fellow with the Hoover Institution.

The report's most interesting table is Table 3. It shows the number of people working in the household:

In the lowest quintile, 58.7 percent of households had no one earning money, 35.9 percent had one earner, and only 5.5 percent of households had two or more earners. (These percentages total 100.1 percent due to rounding.)

In the highest quintile, by contrast, only 2.6 percent had no one earning money, 21.1 percent had one earner, and a whopping 76.3 percent had two or more earners.

In the middle three quintiles only 14.9 percent had no earners and 42.8 percent had two or more earners.

In the lowest quintile, 64.2 percent of the heads of household (the Census now calls them "householders") did not work at all and only 14.0 percent worked full-time year-round; by contrast, in the highest quintile only 11.3 percent of heads of households did not work, while 73.0 percent worked full-time year-round.

In the middle three quintiles, 26.3 percent of heads of households did not work and 54.7 percent of heads of households worked full-time year-round.

The message is clear: if you want to have an extremely high probability of avoiding the lowest quintile, get a job, ideally a full-time job, and live with someone who has a job.

Source: David R. Henderson, "What Are the 'Dynamics of Economic Well-Being'?" TechCentralStation.com, September 13, 2006; based upon: Carmen DeNavas et al., "Income, Poverty and health Insurance Coverage in the United States: 2005," U.S. Census Bureau, August 2006.